“Pick of the Week” Stock-picking Contest

Would anyone be interested in trying their hand at a weekly stock-picking contest?  Well I've been running one for the best part of two years on an internet stock forum called “$$$Mr. Market Is HUGE!$$$”  I just moved the contest from that board to a new one I set up, and so far there are only three other players besides myself.  I expect a few more of the regulars will be coming along eventually.  It's fun!  It's educational!  It just might be very profitable too!  So check it out.  I call it the “Pick of the Week” contest.

2008 Holiday Schedule for the NYSE, NASDAQ and AMEX

2008 Holiday Schedule for the NYSE, NASDAQ and AMEX
Tuesday	January 1	New Year's Day
Monday	January 21	Martin Luther King Jr.'s Birthday (Observed)
Monday	February 18	Presidents' Day
Friday	March 21	Good Friday
Monday	May 26	Memorial Day
Friday	July 4	Independence day*
Monday	September 1	Labor Day
Thursday	November 27	Thanksgiving Day*
Thursday	December 25	Christmas Day*
*The markets will close at 1:00 p.m. on Thursday,July 3, 2008; Friday, November 28, 2008; andWednesday, December 24, 2008.

FDA Members Alleged to Be Involved in Scandalous Ethical Violations

This story provides a revealing look into the mechanics of the FDA drug approval (or disapproval) process, and the picture is not pretty.  If the allegations are true, it would appear that doctors serving on the FDA advisory panel have voted against granting approval to market potentially life-saving drugs largely—if not solely—for the reason that they have large financial investments in companies that produce rival treatments.  Does it get any uglier than this?

EBAY

I was just going to do an update on my EBAY stock post, because I see it has been doing rather nicely as of late.  But then I discovered I didn't post when I took my EBAY position, and I'd have sworn I had.  Oh well, you'll just have to take my word for it I suppose.  I purchased a long position in EBAY on April 19 at 34.80 per share.  Since then the position has been under water for most of that time.  There was a nice spike up in the first half of August that topped out above 37, after which it proceeded to sink back to the high 32s toward the end of that month.  Since then, however, it has been riding up nicely again and as I type, the price is 38.25, a gain of 9.91% from my entry price.

How Political and World Events Affect the Dow Jones Industrial Average

Here's a little study I put together that illustrates how the Dow Jones Industrial Average fared in response to world events and the changing balance of power in U.S. government.

Dow Jones Industrial Average Crosses 13,000 for First Time

In case you weren’t watching, the Dow Jones Industrial Average crossed 13,000 this morning for the first time in history.



As you can see, it crossed the 13,000 line three times by just a few minutes after 10:00.  Of course, this market is based on 2007 dollars, which are fairly weak.  If you were to index this to the high in 2000 based on the value of U.S. dollars in 2000, we probably still have some ground to cover.  But psychologically this is good for the markets in general.

CNBC’s Jim Cramer is predicting that the DJIA will be above 14,000 by the end of the year.  I like that kind of optimism, and I hope he’s right, but I wouldn’t bet the farm on it.

Back Into IMCL

Investing note:  I reopened my long position in ImClone Systems (NASDAQ: IMCL) today @ 40.50.  The negative effect from the news release earlier this week wasn't nearly as strong as I thought it was going to be.  My expectation is that there is going to be a healthy run in this stock at some point between now and mid June, and after struggling with this one for so long I just don't want to miss it.  Naturally there is risk, but we already know IMCL will be moving into 2nd and 1st line colorectal cancer treatment, so the downside risk is somewhat mitigated.

Baker Hughes, Inc.

I just opened a long position in Baker Hughes, Inc. (NYSE: BHI) this morning for $69.40.

This Houston based company is a supplier of products and technology services and systems to the worldwide oil and natural gas industry, including products and services for drilling, formation evaluation, completion and production of oil and natural gas wells.  It's showing a very healthy 27% profit margin and a relatively low multiple of 10, with a forecast of 15% growth in earnings in its next fiscal year.

ImClone Drops on Negative Pancreatic News

ImClone is trading between 7 and 8 percent lower this afternoon as I write this and here is why:

NEW YORK, April 10 /PRNewswire-FirstCall/ -- ImClone Systems Incorporated (Nasdaq: IMCL) and Bristol-Myers Squibb Company (NYSE: BMY) today announced that a Phase III study of ERBITUX(R) (Cetuximab) plus gemcitabine (a chemotherapy) in patients with locally advanced unresectable or metastatic pancreatic cancer did not meet its primary endpoint of improving overall survival.

Link to the whole story.

Needless to say I'm really disappointed by this news.  I was so hoping for positive results out of this trial, not only for the obvious reasons of price appreciation to a stock that I happen to own a lot of, but also for the fact that tens of thousands of people who are diagnosed with this particularly hard-to-treat form of cancer will now not receive a more powerful weapon with which to fight it.

On an investing note, I sold all my shares early this afternoon for an average price of $39.181.  I am considering either buying some Aug. $40 call options or else perhaps simply buying back the shares I sold—hopefully at a lower price.  I do still believe the data to be released at ASCO the 1st week in June will drive the price higher, but things are just a bit too dicey right now to be making any hasty moves.  I've decided to wait for the dust to clear somewhat.

The Analysts Finally Begin to See the Light of Day

Some excerpts from an article by Adam Feuerstein on ImClone for TheStreet.com, Apr. 7, 2007 (all emphasis mine):

[. . .] I have had a love-hate [emphasis on the word “hate”—Rob] relationship with ImClone for years. I've done some of my best work on the stock and, sadly, some of my worst.

[. . .]I think ImClone has a very good stretch ahead of it.[. . .]

At next week's annual meeting of the American Association of Cancer Research, ImClone will be presenting positive survival data from a study of Erbitux in third-line colon cancer as well as positive data from a study combining Erbitux and chemotherapy in second-line colon cancer.

[At the ASCO meeting in June] we'll get more good Erbitux data, including first-line colon cancer data combining Erbitux and chemotherapy (the so-called Crystal study) as well as new and positive data on Erbitux in head-and-neck cancer.

[Referencing a Southwest Oncology Group trial, there is also] Erbitux data from a big pancreatic cancer trial any day.

[. . .] I also think some of the new colon cancer data we'll get in the next few months will help Erbitux gain share in the second-line colon cancer treatment market.

I don't think Erbitux is powerful enough, necessarily, to go after Genentech's (DNA) Avastin in front-line colon cancer, [I disagree.—Rob] but ImClone still wins if doctors see Erbitux as the go-to second-line drug for their colon cancer patients.

This stuff Feuerstein is now (mostly) saying is the stuff I've been preaching for a couple years now. Note the hallowed reverence with which Mr. Feuerstein still prostrates himself before the Avastin juggernaut. I guarantee that behind closed doors Genentech management is not taking a light view of Erbitux about now.

Watch IMCL (ImClone Systems)

Keep an eye on IMCL.  43.08 is the intraday high going all the way back to Mar. 4, 2005.  If it manages to bust through with any kind of momentum and volume, the next level of serious resistance should somewhere in the 46 area.  When that one falls, next stop: 55.

Update

An update on my position in CNBC’s “Million-dollar Portfolio Challenge”:


As you can see, I did make a couple of poor trades that whacked my score down to size.  Due to the nature of this contest, one is practically forced into going all in on one stock and hoping to find ... what? ... “serendipity”? ... “fortuitousness”?  “Luck” is not part of my vocabulary.  We’ll see where it goes from here.

Here are the trades I made those few days that killed me:

3/21:
Bought 16,850 shares of MLHR at 37.84
Bought 14,185 shares of CHL at 46.18

3/22:
Sold 16,850 shares of MLHR at 33.43 (-11.65%)
Sold 14,185 shares of CHL at 46.29 (+0.24%)
Bought 49,054 shares of JBL at $24.93

3/23:
Sold 49,054 shares of JBL at $22.26 (-10.71%)

ImClone (IMCL) Sharply Higher

Shares of ImClone (IMCL) traded sharply higher in extended hours trading yesterday.  Here's the reason:

“Amgen (NASDAQ:AMGN) today announced that it has discontinued Vectibix(TM) (panitumumab) treatment in the PACCE trial evaluating the addition of Vectibix to standard chemotherapy and Avastin® (bevacizumab) for the treatment of first-line metastatic colorectal cancer (mCRC).  [. . .] ‘ We had hoped that adding Vectibix to the current U.S. standard-of-care for patients newly-diagnosed with mCRC would improve outcomes without excessive added toxicity.  Unfortunately, it appears that adding Vectibix to Avastin, when used in combination with oxaliplatin- or irinotecan-based chemotherapy, increased toxicity, without improving efficacy,’ said Roger M. Perlmutter, M.D., Ph.D., executive vice president of Research and Development at Amgen.”—Business Wire

Vectibix is seen to be Erbitux's chief rival in the treatment of metastatic colorectal cancer.  Having followed closely its development, I have always been of the opinion that the level of optimism for Vectibix's success has been poorly-founded.

ImClone (IMCL) closed at $33.88 yesterday before the above news broke at around 5:30.  In after-hours trading it sold as high as $39.32 (+16.06%) and finished at $37.61 (+11.01%).  The extended-hours volume for IMCL was 592,230 or 36.5% of its 3-month average volume for the regular trading session.

Here's a snapshot of the intraday chart from yesterday, which I made at 6:28 p.m.:

CNBC’s “Million Dollar Portfolio Challenge”

I'm an investor, and I love to play the stock market. I may (read: “probably will”) share some of my ideas about certain stocks on this blog in the coming days, weeks, months, etc.

Perhaps you’ve seen where CNBC is running a twelve-week contest called the “Million Dollar Portfolio Challange.” Entrants are given an imaginary portfolio of $1 million to invest in stocks. In each of the first ten weeks of this contest, the player whose portfolio gains the greatest percentage in value wins $10,000 in real money and becomes a finalist to compete in the final two weeks. Ten more finalists are determined by the top 10 portfolio gainers overall for the whole ten-week span. Those twenty individuals then start anew with a $1 million portfolio and compete for the final two weeks. At the end of those two weeks the player whose portfolio has the highest value wins a grand prize of a real one million dollars.

Well, I love a challenge, so I thought I’d have a go at it. Yesterday was the third day of the third week in the contest, and here is my standing so far:

Number 1,996 may not appear to be wonderful, but when you consider that there are at least a quarter million contestants, it’s not too shabby either: (1,996/250,000 = 0.8%). I’ve managed to do well I believe, but I’m obviously going to have to do much better if I expect to win anything. My high water mark (in terms of rank) so far was after the end of trading on Monday this week, when my score looked like this:

Anybody else like the stock market?